ADB country director heads for Myanmar

ADB country director heads for Myanmar

Next week marks the departure of Asian Development Bank country director Putu Kamayana to open a Myanmar office for the Asian Development Bank.

He took time to reflect on his experience in Cambodia, his positive reaction to Toll Royal’s resumption of the Cambodia railway operations and his excitement about heading up an ADB presence in Myanmar.

Kamayana, 58, who arrived in Cambodia in September 2009 to serve as ADB country director, expects a railway freight service between Phnom Penh and Sihanoukville to begin by early next year.

Kamayana said Toll Royal would enjoy the advantages of being operator of the project, enabling them to save money by carrying construction materials by rail.

“We’re glad to see Toll Royal resume their operations because that will facilitate the rehabilitation work, just by the ability of the trains to carry the needed materials. They will also be able to start earning revenues again,” he said.

“I think this is a very important example of a public-private partnership initiative. This project is so important for regional connectivity: to establish a rail link from Singapore to Sihanoukville and is bound to raise the efficiency and lower the cost of transporting freight within Cambodia was well as from Thailand and Malaysia down to Singapore.”

Kamayana said he expected the missing rail link between Kunming, China, and Singapore – the section from Phnom Penh to Ho Chi Minh City – to be completed in the future, for the economic benefit of all.

“We fully expect that rail link will happen in the future and that it will enable freight from Singapore all the way to Europe by rail and that’s phenomenal. It means lower cost of transport and having a good means to move freight to China, Russia and Europe.”

An Indonesian Hindu from Bali, Kamayana has spent the past 16 years working for the Asian Development Bank. Originally trained as an architect, he earned an MBA in San Diego.

He’s happy with the prospects for lower freight rates and regional integration now that Toll Royal is back in business on the Cambodian railways.

“Of course we’re happy. We feel this is a good project for them. We have experienced implementation delays because of various problems that have cropped up in carrying out the work. The resettlement issues have not really delayed the implementation.

“Because of the delays, they are incurring more costs than were being covered by revenues generated by transporting cement. When they come back we understand there is potential for them to find other clients. The railroad track has been rehabilitated beyond Kampot, so at least they can serve Kampot already,” he said.

Kamayana said it was important to have the railway operational during the rehabilitation work because it enabled the operator to bring in their own equipment at low cost instead of having to use trucks.

He retires in March 2014, but before that, he’s looking forward to his Myanmar assignment, starting July 30.

He previously served in Hanoi for two years as well as Dacca, Bangladesh, for four years and out of the ADB headquarters office in Manila, working in both Kazakhstan and Turkmenistan.

“I will be heading up ADB’s extended mission in Myanmar, which is tasked with the re-engagement of ADB with Myanmar, establishing an office there. I’m tremendously excited because this is a once-in-a-lifetime thing.”

Kamayana said there were many things left to happen before a fully fledged ADB office could be opened in Myanmar. The multilateral development banks including ADB and the World Bank are still currently restricted from providing substantial assistance including lending to Myanmar until the sanctions have been removed.

Because the United States is now in the midst of a presidential election, with the US Congress opposing many of the Obama administration’s initiatives, a full lifting of Myanmar economic sanctions may be unlikely to happen this year.

“The administration could convince Congress to lift the sanctions, which probably won’t happen in an election year. The second way is to wait for the sanctions to expire. That’s what’s holding back the ADB and World Bank.

“I think the poor are hurt the most by sanctions.”

Myanmar’s natural economic advantages of a large land mass twice the size of Vietnam, 60 million people, a big coastline, oil and gas reserves, minerals and gems as well as tourism all showed great potential.

However, the country would require a sound regulatory system in order for economic development to really take off, he said.

“All of these businesses that want to come into Myanmar need solid legal and regulatory systems. All of the infrastructure, electric power, roads and the court system are needed in order for companies to make their investments.

“Who is going to finance them? The government needs foreign assistance for all of these things. Until the multilateral development banks are allowed to work there, things are not going to change very quickly, despite the Europeans lifting sanctions and despite American partial lifting. Who is going to risk it before things get much clearer?”

Kamayana described the present Myanmar government as “very reform minded”.

“They need to start showing results. Things are probably not going to move as fast as they had hoped. I think the reformists are feeling under pressure. They are drawing up a development strategy which is going to be approved soon that will set out their priorities in agricultural production, the education system, similar to what’s been done here in Cambodia.”

He suggested that Myanmar could learn lessons from Cambodia about building the capacity of government institutions and in the population with primary secondary, vocational and technical training.

“Lessons can be learned from Cambodia, Vietnam and Laos, who have been through development. The financial sector needs to be modernised. All of these things have to be done and will have to be done in a systematic way that doesn’t overwhelm the authorities and the people so that it is realistic and achievable. It has to be done at a sound pace. It is a huge task to be closed for decades and suddenly open up without getting overwhelmed.”

Kamayana answered a few questions on the eve of his farewell to Cambodia:

What’s the most important thing the Cambodian government needs to change?

Civil service reform and compensation reform are needed in order to improve the efficiency of the government. Cambodia is already a relatively open economy, but I think more can be done to improve the enabling environment for the private sector to flourish. The private sector is the engine of growth. The government needs the private sector to play a pivotal role. It will enable the government to play the enabling role and regulating business to not take undue advantage of the people, but so the private sector can make fair profit and promote development of the country and that includes small- and medium-sized enterprises (SMEs). Unless you develop and enable SMEs you are not going to get large scale entrepreneurs. That’s the only way the economy will grow and tax revenues will increase so that government spending can increase too.

Do you think the era of the NGO is winding down?

No. There’s always a role for providing services for funding of charities. The capacity of the government is still limited. NGOs will still play an important role in providing services to the poor and most vulnerable people, the disabled, and the bottom rungs of society. No matter what, it will be a long time before the government has the resources and personnel to provide the same level of services across the whole country. NGOs also bring lessons from other countries facing similar situations, good ideas and best practices. We at ADB often engage them, consult with them, and engage them in delivering services on some of our projects.

Do you see a danger of Cambodia being swamped economically by her neighbours, Vietnam and Thailand?

I don’t think that’s the way they see it. It depends on how you manage it. I think there are good examples of how working together with neighbours can produce more benefits. That’s what we’ve been doing with our Greater Mekong Sub-region (GMS) project. We are building capacity in Cambodia as part of global supply chains.

Cambodia will benefit a great deal because of the advantages Cambodia has. People here are trainable, patient, and when they work they are meticulous. Certain types of work like manufacturing, electronics, which are already coming to Cambodia, the people here are good at. These jobs require patience. Vietnam has brought in finance, technology, rubber plantations, new knowledge, and management skills. These things just need to be managed.

What about the influence of China? Do you see Chinese influence here as a positive?

Of course China is a positive influence, because China is an important market for Cambodia and an important source of investment capital.

There is a lot of concern about excessive influence of China, and I think time will tell. I don’t pretend to understand everything, but I believe the government is prudent about managing good relations with China as it does with its ASEAN neighbours and other foreign donors who have helped them a lot.

What about influence from the US? Do you think the Foreign Corrupt Practices Act is going to prevent a lot of US companies from doing business here?

I think the smart companies would go through individuals here and use the American Chamber of Commerce and decide whether the type of business they intend to do faces these kinds of risks.

I do understand the government is trying to rationalise these facilitation payments and make them legal and receiptable. I think that’s a solution, and I think the government realises that.

This anti-corruption law here is probably not a bad law at all. It requires implementation and capacity to monitor and enforce. That will take time.

What do you see as Japan’s role in developing Cambodia?

Japan was very much an important part of the peace process and recovery process. The first head of UN operations here was Japanese, and Japan has maintained important relations with Cambodia.

Japan has been instrumental in providing assistance in reconstruction.

Cambodia has become an attractive place for Japanese investors in manufacturing who are taking advantage of this young, trainable population.

It has a huge young population which really has potential for being employed in industries which can feed into assembly in other countries in the region.

If you could change the ADB in any way, how would you do it?

I would hope that ADB would be increasingly more decentralised by placing more specialists in-country because there’s a world of difference between being based in headquarters and being in-country and maintaining and developing relationships between your counterparts in government and civil society and monitoring the implementation of your projects and strengthening the capacity of institutions.

Having more people in the country offices will improve the quality of design and implementation and impact on the beneficiaries who are the poor. This is an extremely satisfying job and the good relationships we’ve managed to maintain and strengthen with the government and other stakeholders have led to providing good technical advice, building capacity and investments across a wide spectrum of sectors which will help the government to reduce poverty through sustainable economic growth.

I’m happy to have helped develop railroad projects, provincial road networks, programs that teach farmers how to sort and package vegetables so they last longer.

According to your own observations and study, what’s the most effective means of fighting poverty?

You can’t reduce poverty sustainably by working in just one area. You have to look at all the different systems and make sure that you improve things in a way which then work together to create a bigger impact. For instance, most of the poor live in rural areas and most depend on agriculture for a living. If you can improve their productivity, increase their production through better seeds, easier access to fertiliser and technology, methodology and extension services, you will help to improve productivity.

You need to improve irrigation and improve rural roads to get access to inputs and send products to market but also have easier access to schools and health services. You need to also improve the infrastructure in the towns and provincial capitals where these markets will be for farmers to sell products. There also needs to be improvement measures at the border; customs procedure and transport agreements that allow trucks to move quickly across borders without having to offload and load again. That’s trade facilitation. All of these things we try to work on. In the financial sector, we work on setting up rules and regulations to monitor the banking system better and to provide easier access to finance for the poor and rural farmers. Most of the banking services are in urban areas.

We looked at government’s strategy and priorities, and we looked at our experience and lessons and we tried to focus on fewer sectors so that we could have a greater impact with whatever resources we could apply: agriculture, water resource management, transport (rural and provincial) financial sector, education, and vocational training to build up the skills of the labour force.

We’ve also focused on urban development, including sanitation in provincial towns and public sector management including public financial management, decentralisation and de-concentration, as well as measures to promote good governance and combat corruption. That’s the essence of our strategy.

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